Flux Power Holdings, Inc.
For the period ended Sep 30, 2024. Filed Mar 20, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Mar 20, 2025
FLUX$0.32+1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001493152-24-018968
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2025-03-20.
0001493152-25-011032
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 80 current paragraphs.
29 unchanged; 18 reworded; 32 added; 25 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
We are also expanding our deployment of our telemetry solution providing customers with state of health, better asset management, and a platform for more timely management of service and maintenance requirements.
Current report
We also announced a new partnership aimed at enhancing the recycling process for end-of-life lithium-ion batteries with the largest critical battery components recycling company in the U.S. This collaboration represents a significant step forward in our ongoing commitment to environmental responsibility.
Current report
Nasdaq Stock Market Notices
Current report
On January 31, 2025, the Company received a notice (the “January Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that based on its stockholders’ equity of $194,000 as reported in its Form 10-K for the fiscal year ended June 30, 2024, the Company is no longer in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing on Nasdaq (the “Stockholders’ Equity Requirement”).
Current report
Pursuant to the January Notice, the Company had 45 calendar days from the date of the January Notice, or until March 17, 2025, to submit a plan to regain compliance. On March 17, 2025, the Company filed its plan (the “Stockholders’ Equity Compliance Plan”) with Nasdaq to regain compliance with the Stockholders’ Equity requirement, including requesting an extension through July 30, 2025, which is 180 days from the date of the Stockholders’ Equity Notice to regain compliance of the Stockholders’ Equity Requirement. In the event the plan is not accepted by Nasdaq, or in the event the plan is accepted by Nasdaq and the 180-day extension period is granted, but the Company fails to regain compliance within such plan period, the Company would have the right to a hearing before an independent panel. The hearing request would stay any suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted by the panel following the hearing. The Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and to remain listed on Nasdaq.
Current report
On February 21, 2025, the Company received an additional notice (the “February Notice”) from the Nasdaq Listing Qualifications Department (the “Staff”) stating that because the Company had not yet filed its Form 10-Q for the period ended December 31, 2024 (the “December Form 10-Q”) and because the Company remains delinquent in filing its Form 10-Q for the period ended September 30, 2024 (the “September Form 10-Q” and together with the December Form 10-Q, the “Delinquent Reports”), the Company does not comply with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”), which requires Nasdaq-listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission, and required the Company to submit an update to its original plan to regain compliance with the Listing Rule.
Current report
If Nasdaq accepts the Company’s update to its original plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the due date of the initial delinquent filing, the Form 10-K for the fiscal year ended June 30, 2024, or until April 14, 2025, to file the Delinquent Reports to regain compliance. The Company submitted its update to its original plan to Nasdaq on February 25, 2025, including its plan to file the Delinquent Reports by no later than April 14, 2025.
Current report
If Nasdaq does not accept the Company’s Stockholders’ Equity Compliance Plan and the Company fails to prevail in its appeal to Nasdaq, or if the Company fails to comply with the Nasdaq listing requirements and does not regain compliance, the Company’s common stock will be subject to delisting by Nasdaq. In the event our common stock is delisted, our stock price and market liquidity of our stock will be adversely affected which will impact the ability of the Company’s stockholders to sell securities in the market. Further, delisting from Nasdaq could also have other negative effects, including potential loss of confidence by partners.
Current report
The February Notice states that as a result of this additional delinquency, the Company must submit an update to its original plan to regain compliance with respect to the filing requirement. If Nasdaq accepts the Company’s update to its original plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the due date of the initial delinquent filing, the Form 10-K for the fiscal year ended June 30, 2024, or until April 14, 2025, to file the Delinquent Reports to regain compliance. The February Notice has no immediate effect on the listing of the Company’s common stock on Nasdaq. The Company submitted its update to its original plan to Nasdaq on February 25, 2025, including its plan to file the Delinquent Reports by no later than April 14, 2025.
Current report
There can be no assurances that the Company will be able to regain compliance with the Stockholders’ Equity Requirement or that the Company will otherwise be in compliance with all applicable requirements for continued listing on the Nasdaq. In the event our common stock is delisted, our stock price and market liquidity of our stock will be adversely affected which will impact the ability of the Company’s stockholders to sell securities in the market. Further, delisting from Nasdaq could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees.
Current report
Management and Board of Directors Changes
Current report
On March 10 2025, Mr. Ronald F. Dutt, our former chairman and Chief Executive Officer, notified the Company’s Board of Directors (the “Board”) of his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive Officer and President of the Company and its wholly owned subsidiary, Flux Power, Inc. (“Flux Power”), effective March 10, 2025. Mr. Dutt’s stepping down is for personal reasons and not due to any disagreement with the Company’s management team or the Company’s Board on any matter relating to the operations, policies or practices of the Company or any issues regarding the Company’s accounting policies or practices.
Current report
In connection with Mr. Dutt’s retirement, the Board appointed Mr. Dale T. Robinette as the new Chairman of the Board, effective March 10, 2025. Mr. Robinette also currently serves as an independent director, lead independent director, chairperson of the Compensation Committee, and a member of both the Audit Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr. Krishna Vanka as director, Chief Executive Officer and President of the Company and Flux Power, effective March 10, 2025.
Current report
Employment Agreement with Mr. Vanka
Current report
On March 10, 2025, the Company entered into an executive employment agreement with Mr. Vanka, pursuant to which he will serve as the Chief Executive Officer and President of the Company (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. Vanka will receive an annual base salary of $400,000, subject to annual performance reviews by the Board or Compensation Committee. As an initial incentive for achieving key financial milestones, Mr. Vanka will be awarded a cash bonus of $100,000 if the Company’s average EBITDA is net positive over the next nine months (end of the calendar year). Beginning fiscal year 2026, Mr. Vanka will have the ability to achieve a cash bonus of up to 150% of base salary based on budget performance goals as determined by the Board or the Compensation Committee. Beginning fiscal year 2026, Mr. Vanka will be granted time-based restricted stock units (“Time RSUs”) equivalent to 50% of his base salary, vesting in three (3) equal annual installments over three (3) years. He will also be eligible for performance-based restricted stock units (“PSUs”), with a target of 50% of his base salary and a maximum of 150%, based on budget performance goals. Any earned PSUs will cliff-vest on the third (3rd) anniversary of the grant date.
Current report
Additionally, the Employment Agreement provides that Mr. Vanka may be terminated at any time by the Company with or without cause. If Mr. Vanka is terminated without cause or upon a Change in Control (as defined in the Employment Agreement), he will receive: (a) twelve (12) months of base salary paid in a lump sum; and (b) twelve (12) months of continued life, medical and dental insurance coverage, with the Company covering the cost subject to the same employee contribution as active employees. Additionally, in the event of a Change in Control termination, Time RSUs and any PSUs, for which the performance criteria are satisfied, will be subject to double-trigger acceleration. Mr. Vanka is subject to a non-compete obligation during the term of his employment and confidentiality obligations that extend beyond termination. The Employment Agreement also includes other customary clauses and arrangements.
Current report
Amendment to Employment Agreement and Separation and Release with Mr. Dutt
Current report
To ensure a smooth transition, on March 10, 2025, the Company entered into an Amendment to Mr. Dutt’s Amended and Restated Employment Agreement, dated February 17, 2021 (the “Amendment to Dutt Employment Agreement,” and together with the Amended and Restated Employment Agreement, the “Dutt Employment Agreement”). Under this amendment, Mr. Dutt may provide services and answer questions on an as-needed basis as a senior advisor and will be compensated based on his current monthly salary in the amount of $32,187.50 through March 2025, unless terminated earlier pursuant to its terms. Mr. Dutt will report to the Chief Executive Officer or his designee.
Current report
In addition, the Company and Mr. Dutt also agreed to enter into a separation and release agreement (“Separation Agreement”), which includes the contemplated terms of the payments and benefits in exchange for the release and other agreements set forth therein (the “Severance Benefits”) with Mr. Dutt, including: (a) a cash severance payment of $386,250.02, equivalent to twelve (12) months of his base salary as of the Resignation Date to be paid pro ratably over twelve (12) months; and (b) a monthly cash payment for twelve (12) months in an amount of $4,034.20 for health insurance coverage. Mr. Dutt’s Separation Agreement includes a customary general release of claims in favor of the Company and certain related parties.
Current report
Revenues for the quarter ended September 30, 2024 were $16,125,000 versus $14,787,000 for the quarter ended September 30, 2023. The increase of $1,338,000 or 9% was primarily driven by an increase in shipments into the Ground Support Equipment market at higher average selling prices compared to the same period in the prior year. This was partially offset by a reduction in shipments to the Material Handling market.
Current report
Cost of sales for the quarter ended September 30, 2024 was $10,907,000 or 68% of revenue versus $10,552,000 or 71% of revenue for the quarter ended September 30, 2023. The increase in cost of sales was directly associated with an increase in the number of units of energy storage packs sold during the current quarter. The decline in cost of sales as a percent of revenue of 300 basis points is driven by an increase in average selling prices in the Ground Support Equipment market partially offset by an increase in warranty costs.
Current report
Gross profit for the quarter ended September 30, 2024 was $5,218,000 or 32% of revenue versus $4,235,000 or 29% of revenue for the quarter ended September 30, 2023. The 300 basis point increase in gross profit margin (gross profit as a percent of revenues) was primarily driven by an increase in average selling prices in the Ground Support Equipment market, partially offset by an increase in warranty costs.
Current report
Selling and administrative expenses for the quarter ended September 30, 2024 were $5,115,000 versus $4,725,000 for the quarter ended September 30, 2023. The increase of $390,000 or 8% was primarily attributable to stock-based compensation and professional services associated with the restatement of previously issued financial statements.
Current report
Research and development expenses for the quarter ended September 30, 2024 were $1,315,000 versus $1,295,000 for the quarter ended September 30, 2023. Research and Development expenditures by expense type were consistent between the two periods.
Current report
Interest Income (Expense), net
Current report
Interest income (expense), net for the quarter ended September 30, 2024 was $457,000 versus $403,000 for the quarter ended September 30, 2023. Interest income (expense), net for the quarter ended September 30, 2024 increased by $54,000 or 13%. The increase in interest income (expense), net was primarily related to higher balances outstanding under our credit facility.
Current report
On January 22, 2025, we entered into Amendment No. 4 to the Loan and Security Agreement (the “Fourth Amendment”) with GBC which amended certain terms of the Loan and Security Agreement dated July 28, 2023, as amended, relating to the EBITDA Minimum financial covenant of the Company. In consideration for the Fourth Amendment, we agreed to pay GBC a non-refundable amendment fee of $50,000 in cash, as follows: (i) $25,000 paid on March 1, 2025, and (ii) $25,000 shall be due and payable on April 1, 2025.
Current report
As of January 31, 2025, we believe our cash balance of $0.4 million, together with $4.9 million available under our $16.0 million revolving line of credit with GBC, subject to borrowing base limitations, and $1.0 million available under the subordinated line of credit (“Subordinated LOC”) through August 2025, will not be sufficient to meet our anticipated capital resources to fund planned operations for the next twelve (12) months. See “Future Liquidity Needs” below andLiquidity and Financial Condition in Note 2 – Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements for additional information
Current report
Net cash provided by operating activities was $944,000 for the three months ended September 30, 2024, which consisted of $1,679,000 provided by changes in operating assets and liabilities and $934,000 of non-cash operating costs, partially offset by net loss of $1,669,000. The primary changes in operating assets and liabilities were a decrease in inventories and an increase in accounts payable and accrued expenses combined, partially offset by reductions in deferred revenue and customer deposits.
Current report
Net cash used in operating activities was $3,093,000 for the three months ended September 30, 2023, which consisted of net loss of $2,188,000 and $1,782,000 used in changes in operating assets and liabilities, partially offset by $877,000 of non-cash operating costs. The primary changes in operating assets and liabilities were increases in accounts receivable, inventories and other assets, partially offset by reductions in accounts payable and accrued expenses combined and deferred revenue.
Current report
Net cash used in financing activities for the three months ended September 30, 2024 was $830,000, which primarily consisted of $1,793,000 in net repayments under the working capital line of credit, partially offset by $1,000,000 of subordinated debt borrowings.
Current report
Our failure to timely file our fiscal 2024 annual report on Form 10-K and subsequent fiscal 2025 interim quarterly reports on Form 10-Q means that we currently are ineligible to use a registration statement on Form S-3. We will not be eligible to use a registration statement on Form S-3 again until we have timely filed all materials and reports required to be filed pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 for a period of at least twelve (12) calendar months immediately preceding the filing of a new registration statement on Form S-3. The inability to use a Form S-3 registration statement will limit our ability to raise capital through sales of our securities and would require us to file a Form S-1, which would require additional effort to complete. To the extent that we raise additional funds by issuing equity, equity-linked or convertible debt securities, our stockholders may experience dilution and such financing may involve restrictive covenants and could be costly.
Removed paragraphs (25)
Previous report
Recent Corporate Developments
Previous report
The Company notified GBC of a certain event of default with respect to the Company’s anticipated failure to maintain the EBITDA covenant for the trailing three (3) month period ended April 30, 2024 (the “Default”). On May 8, 2024, the Company received a waiver to the Loan and Security Agreement with GBC dated July 28, 2023, as amended (the “Agreement”), which waived the Default, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the Waiver duly executed by the Company; (ii) receipt of the waiver fee of $20,000; (iii) receipt of the representations and warranties from the Company that after giving effect to the Waiver, the representations and warranties contained in the Agreement, the Waiver and the other Loan Documents (as defined in the Agreement) shall be true and correct; and (iv) after giving effect to the Waiver, additional or event of default shall have occurred and be continuing on and as of the effective date of the Waiver. The Company is working with GBC to modify the financial covenants in the Agreement to prevent future defaults.
Previous report
Revenues for the quarter ended March 31, 2024, decreased by $630,000 or 4% to $14,457,000, compared to $15,087,000 for the quarter ended March 31, 2023. The decrease in revenues was primarily due to lower capital spending in the market sectors that we serve resulting in shipments of fewer units during the quarter ended March 31, 2024, partially offset by price increases for certain energy storage units.
Previous report
Cost of sales for the quarter ended March 31, 2024, decreased by $301,000 or 3% to $10,067,000 compared to $10,368,000 for the quarter ended March 31, 2023. The decrease in cost of sales was directly associated with a decrease in units of energy storage packs sold during the current quarter, and lower average cost of sales per unit achieved during the current quarter as a result of our product cost improvement initiatives, offset by higher warranty costs. Cost of sales as a percent of revenues for the quarter ended March 31, 2024 was 70%, an increase of only 1 percentage point compared to 69% for the quarter ended March 31, 2023.
Previous report
Gross profit for the quarter ended March 31, 2024 decreased by $329,000 or 7%, to $4,390,000 compared to $4,719,000 for the quarter ended March 31, 2023. The gross profit margin (gross profit as a percent of revenues) decreased to 30% for the quarter ended March 31, 2024 compared to 31% for the quarter ended March 31, 2023. Gross profit margin decreased nominally by 100 basis points as a result of higher warranty expense during the current quarter, partially offset by lower average cost of sales per unit achieved during the quarter ended March 31, 2024 as a result of our product cost improvement initiatives.
Previous report
Selling and administrative expenses for the quarter ended March 31, 2024 increased by $587,000 or 12%, to $5,311,000 compared to $4,724,000 for the quarter ended March 31, 2023. The increase was primarily attributable to higher staff related expenses including certain severance expenses and increases in stock-based compensation, recruiting expenses, outbound shipping costs, and professional service fees, partially offset by decreases in sales commissions, D&O insurance expense, travel expense, and depreciation expense.
Previous report
Research and development expenses for the quarter ended March 31, 2024 increased by $104,000 or 9%, to $1,286,000 compared to $1,182,000 for the quarter ended March 31, 2023. Such expenses consisted primarily of materials, supplies, salaries and personnel related expenses, product testing, consulting, and other expenses associated with revisions to existing product designs and new product development. The increase in research and development expense was primarily due to higher staff related expense including severance expense, stock-based compensation, travel expense, and general research and development costs, partially offset by a decrease in equipment rental fees.
Previous report
Interest Expense, net
Previous report
Interest expense for the quarter ended March 31, 2024 increased by $175,000 or 68% to $433,000 compared to $258,000 for the quarter ended March 31, 2023. The increase in interest expense was primarily related to higher balances outstanding under our credit facility. The interest expense for the quarter ended March 31, 2024 and 2023 included amortization of debt issuance costs related to our existing credit facility of $41,000 and $20,000, respectively. In addition, approximately $23,000 of other financing costs were included in interest expense during the quarter ended March 31, 2024.
Previous report
Revenues
Previous report
Revenues for the nine months ended March 31, 2024, decreased by $2,487,000 or 5% to $47,598,000, compared to $50,085,000 for the nine months ended March 31, 2023. The decrease in revenues was due to lower capital spending in the market sectors that we serve resulting in shipments of fewer units during this fiscal year and a larger mix of lower capacity models.
Previous report
Cost of Sales
Previous report
Cost of sales for the nine months ended March 31, 2024, decreased by $4,081,000 or 11% to $33,229,000 compared to $37,310,000 for the nine months ended March 31, 2023. The decrease in cost of sales was directly associated with fewer units sold due to delays in the delivery and ordering of forklifts, partially offset by lower average cost of sales per unit achieved during the current period as a result of our product cost improvement initiatives. Cost of sales as a percent of revenues for the nine months ended March 31, 2024 was 70%, an improvement of 4 percentage points compared to 74% for the nine months ended March 31, 2023.
Previous report
Gross Profit
Previous report
Gross profit for the nine months ended March 31, 2024 increased by $1,594,000 or 11%, to $14,369,000, compared to $12,775,000 for the nine months ended March 31, 2023. The gross profit margin (gross profit as a percent of revenues) increased to 30% for the nine months ended March 31, 2024 compared to 26% for the nine months ended March 31, 2023. Gross profit margin improved by 400 basis points as a result of lower average cost of sales per unit achieved during the nine months ended March 31, 2024 as a result of our gross margin improvement initiatives, partially offset by a revenue decrease during the period.
Previous report
Selling and Administrative Expenses
Previous report
Selling and administrative expenses for the nine months ended March 31, 2024 increased by $1,119,000 or 8%, to $14,629,000, compared to $13,510,000 for the nine months ended March 31, 2023. The increase was primarily attributable to higher staff related expenses, including certain severance expenses and increases in stock-based compensation, recruiting costs, professional service fees, depreciation expense, public relation costs, and travel expense, partially offset by decreases in sales commissions, D&O insurance expense, sales and marketing expenses, and consulting fees.
Previous report
Research and Development Expense
Previous report
Research and development expenses for the nine months ended March 31, 2024 increased by $454,000 or 13%, to $4,021,000 compared to $3,567,000 for the nine months ended March 31, 2023. Such expenses consisted primarily of materials, supplies, salaries and personnel related expenses, product testing, consulting, and other expenses associated with revisions to new product development and existing product designs. The increase in research and development expenses was primarily due to higher staff related expenses, partially offset by decreases in equipment rental fees and general research and development costs.
Previous report
Interest Expense, net
Previous report
Interest expense, net for the nine months ended March 31, 2024 increased by $314,000 or 32% to $1,285,000 compared to $971,000 for the nine months ended March 31, 2023. The increase in interest expense was primarily related to higher balances outstanding under our credit facilities. The interest expense for the nine months ended March 31, 2024 and 2023 included additional interest expense of $175,000 and $445,000, respectively, representing the amortization of debt issuance costs related to our existing credit facilities. In addition, approximately $87,000 of other financing costs were included in interest expense during the nine months ended March 31, 2024.
Previous report
Net Loss
Previous report
Net cash used in operating activities was $4,274,000 for the nine months ended March 31, 2024, compared to net cash used in operating activities of $5,197,000 for the nine months ended March 31, 2023, primarily reflecting increases in working capital requirements. The primary usages of cash for the nine months ended March 31, 2024 were the net loss of $5,566,000 and increases in accounts receivable, inventory, and other assets and decreases in office lease payable and customer deposits, that were partially offset by non-cash operating costs, and increases in accounts payable, accrued expenses, deferred revenue, and accrued interest. The primary usages of cash for the nine months ended March 31, 2023 were the net loss of $5,265,000 and increases in accounts receivable, and inventory, and decreases in deferred revenue, customer deposits and office lease payable, that were partially offset by non-cash operating costs, and increases in accounts payable and accrued expenses and a decrease in other assets.
Previous report
Net cash provided by financing activities was $3,733,000 for the nine months ended March 31, 2024, which primarily consisted of $3,733,000 in net borrowing under the GBC Credit Facility and SVB Credit Facility, $110,000 proceeds from issuance of common stock, partially offset by payments of financed leases of $110,000.
Previous report
In the event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely basis or on acceptable terms. To the extent that we raise additional funds by issuing equity or convertible debt securities, our stockholders may experience additional dilution and such financing may involve restrictive covenants.
Reworded paragraphs (18)
Previous wording
The following discussion provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. The discussion should be read in conjunction with the unaudited interim condensed consolidated Financial Statements and Notes thereto and Part II, Item 7, Management’s Discussion and Analysis of Financial condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
Current wording
The following discussion provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. The discussion should be read in conjunction with the unaudited interim condensed consolidated Financial Statements and Notes hereto and Part II, Item 7, Management’s Discussion and Analysis of Financial condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
Previous wording
We design, develop, manufacture, and sell a portfolio of advanced lithium-ion energy storage solutions for electrification of a range of industrial commercial sectors which include material handling, airport ground support equipment (“GSE”), and other commercial and industrial applications. We focus on providing lithium-ion products and service to large fleets of Fortune 500 customers. We believe our mobile and stationary energy storage solutions provide our customers a reliable, high performing, cost effective, and more environmentally friendly alternative as compared to traditional lead acid and propane-based solutions. Our modular and scalable design allows different configurations of lithium-ion battery packs to be paired with our proprietary wireless battery management system to provide the level of energy storage required and “state of the art” real time monitoring of pack performance. We believe that the increasing demand for lithium-ion energy storage solutions and more environmentally friendly energy alternatives from commercial and industrial users should continue to drive our revenue growth.
Current wording
We design, develop, manufacture, and sell a portfolio of advanced lithium-ion energy storage solutions for electrification of a range of industrial and commercial sectors which include material handling and airport ground support equipment (“GSE”). We believe our mobile energy storage solutions provide our customers a reliable, high performing, cost effective, and more environmentally friendly alternative as compared to traditional lead acid and propane-based solutions. Our modular and scalable design allows different configurations of lithium-ion energy storage solutions to be paired with our proprietary wireless battery management system to provide the level of energy storage required and “state of the art” real time monitoring of pack performance. We believe that the increasing demand for lithium-ion energy storage solutions and more environmentally friendly energy storage solutions in the material handling sector should continue to drive our revenue growth.
Previous wording
Our long-term strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting large companies having energy storage needs. We have established selling relationships with OEMs and customers with large fleets of forklifts and GSEs. We intend to reach this goal by investing in research and development to expand our technology and product mix, our sales and marketing efforts, by improving our customer support efforts, and by continuing our efforts to improve production capacity and efficiencies. Our research and development efforts will continue to focus on providing adaptable, reliable and cost-effective energy storage solutions to improve asset management for our customers. We have filed three new patents on advanced technology related to lithium-ion battery packs. The technology behind these pending patents is designed to:
Current wording
Our long-term strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting large companies having energy storage needs. We have established selling relationships with customers with large fleets of forklifts and GSE. We intend to reach this goal by investing in research and development to expand our product mix, by expanding our sales and marketing efforts, improving our customer support efforts and improving production efficiencies. Our research and development efforts will continue to focus on providing adaptable, reliable and cost-effective energy storage solutions for our customers. We have filed three new patents on advanced technology related to lithium-ion energy storage solutions. The technology behind these pending patents is designed to:
Previous wording
Our largest sector of penetration thus far has been the material handling sector which we believe is a multi-billion dollar addressable market. We believe the sector will provide us with an opportunity to grow our business as we enhance our product mix and service levels and grow our sales to large fleets of forklifts and GSEs. Applications of our modular packs for other industrial and commercial uses, such as solar energy storage, are providing additional growth opportunities. We intend to continue to expand our supply chain and customer partnerships and seek further partnerships and/or acquisitions that provide synergy to meeting our growth and “building scale” objectives.
Current wording
Our largest sector of penetration thus far has been the material handling sector which we believe is a multi-billion-dollar addressable market. We believe the sector will provide us with an opportunity to grow our business as we enhance our product mix and service levels and grow our sales to large fleets of forklifts and GSE. Applications of our modular packs for other industrial and commercial uses, such as mobile energy storage systems, are providing additional current growth and further opportunities. We intend to continue to expand our supply chain and customer partnerships and seek further partnerships and/or acquisitions that provide synergy to meeting our growth and “building scale” objectives.
Previous wording
As of May 6, 2024, our order backlog was approximately $18.5 million and, in part, reflects current delays in orders of new forklifts due to a general slowing of capital spending by our customers.
Current wording
As of February 28, 2025, our order backlog was approximately $19.5 million and, in part, reflects current delays in orders of new forklifts due to a general slowing of capital spending by our customers.
Previous wording
We have recently experienced some delays in new orders of our energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital spending in the market sector that we serve and interest rate variability affecting selected large customer fleets. While we have had very few cancellations of existing purchase orders, some customers have revised their order terms to the July – December 2024 period. Causal rationale for delays is speculative and not definitive, but some customer feedback indicates concerns over the economy and the uncertainty of interest rates. The impact of order deferrals has required additional selling strategies to support our targeted sales trajectory.
Current wording
We have experienced some delays in new orders of our energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital spending in the market sector that we serve and due to interest rate variability affecting capital spending by certain large customer fleets. While we have had very few cancellations of existing purchase orders, some customers have extended their orders to later periods. Causal rationale for delays is speculative and not definitive, but some customer feedback indicates concerns over the economy and the uncertainty of interest rates, as well as broader geopolitical uncertainty. The impact of order deferrals has required additional selling strategies to support our targeted sales trajectory.
Previous wording
We have seen improvements in our sourcing and purchasing activity, reflecting our efforts to expand and optimize our vendor strategy. Additional improvements include more secondary sources to minimize stock-outs, lower costs from increasing sources, and controlled delivery times, as evidenced in our maintaining inventory levels. With strategic supply chain and profitability improvement initiatives, lower costs and higher volume purchasing, we are targeting gross margin improvement to continue. We are highly focused on expanding sales and marketing initiatives to secure new customer relationships and support continued migration to lithium of current customers. We recently have added our second tier one OEM private label program to supplement our strong OEM relationships and approvals. We are also working with our distribution network to expand customer acquisition with direct-to-customer initiatives.
Current wording
We have seen improvements in our sourcing and purchasing activity, reflecting our efforts to expand and optimize our vendor strategy. Additional improvements include more secondary sources to minimize stock-outs, lower costs from increasing sources, and controlled delivery times, as reflected in our current inventory levels. With strategic supply chain and profitability improvement initiatives, lower costs and higher volume purchasing, we are targeting gross margin improvement to continue. We are highly focused on expanding sales and marketing initiatives to secure new customer relationships and support continued migration to lithium of current customers. We recently have added our second “tier one” OEM private label battery program to supplement our strong OEM relationships and approvals. This collaboration marks a significant milestone for our S-Series line, which now includes products with the UL Type EE certification, which provides added safety and durability. We are also working with our distribution network to expand customer acquisition with direct-to-customer initiatives.
Previous wording
Net loss for the quarter ended March 31, 2024 increased by $1,195,000 or 83%, to $2,640,000 as compared to $1,445,000 for the quarter ended March 31, 2023. The increase in net loss for the three months ended March 31, 2024 was primarily attributable to decreased gross profit, and increases in operating expenses and interest expense.
Current wording
Net loss for the quarter ended September 30, 2024, was $1,669,000 versus $2,188,000 for the quarter ended September 30, 2023. The decrease in net loss for the three months ended September 30, 2024 was primarily attributable to increased gross profit, which was partially offset by increases in operating expenses and interest expense.
Previous wording
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is calculated by taking net income and adding back the expenses related to interest, income taxes, depreciation, amortization, and stock-based compensation, each of which has been calculated in accordance with GAAP. Adjusted EBITDA was a loss of $1,380,000 for the three months ended March 31, 2024 an increase of $704,000 compared to a loss of $676,000 for the three months ended March 31, 2023. Adjusted EBITDA was a loss of approximately $2,261,000 for the nine months ended March 31, 2024 and improved by $847,000 from a loss of $3,108,000 for the nine months ended March 31, 2023.
Current wording
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is calculated by taking net loss and adding back the expenses related to interest, income taxes, depreciation, amortization and stock-based compensation, each of which has been calculated in accordance with GAAP. Adjusted EBITDA was a loss of $613,000 for the quarter ended September 30, 2024, an increase of $635,000 compared to a loss of $1,248,000 for the quarter ended September 30, 2023.
Previous wording
For the nine months ended March 31, 2024, the Company generated negative cash flows from operations of $4.3 million. As of March 31, 2024, the Company had an accumulated deficit of $94.1 million. To date, our business has not generated sufficient cash to fund our operations. However, given our existing backlog, we anticipate that revenue growth coupled with improvement in our gross margin and lower operating expenses will move us closer to profitability and improve our cash flow. Our gross margin improvement plan includes, but is not limited to, efforts to reduce product costs while increasing the price of our products for new orders. We have received new orders during the twelve (12) months period ended March 31, 2024, of approximately $58.5 million.
Current wording
To date, our business has not generated sufficient cash to fund our operations. However, given our existing backlog, we anticipate that revenue growth coupled with improvement in our gross margin and lower operating expenses will move us closer to profitability and improve our cash flow. Our gross margin improvement plan includes, but is not limited to, efforts to reduce product costs while increasing the price of our products for new orders. We received new orders during the three months ended September 30, 2024 of approximately $19.5 million.
Previous wording
As of March 31, 2024, we have an existing cash balance of $1.3 million, the $2.4 million available under our $16.0 million GBC Credit Facility subject to borrowing base limitations, and the $2.0 million available from Cleveland Capital under our 2023 Subordinated LOC. However, if the Company continues the covenant non-compliance that was experienced for the trailing three (3) month period ended April 30, 2024, or the revised covenants set by GBC will not be met, there may not be additional funds available under the GBC LOC.(See Note 2 – Going Concern).
Current wording
As of September 30, 2024, we had an existing cash balance of $0.6 million, $4.0 million available under our $16.0 million GBC Credit Facility, subject to borrowing base limitations, and $1.0 million available from Cleveland Capital under our $2.0 million 2023 Subordinated LOC.
Previous wording
Net cash used in investing activities was $588,000 for the nine months ended March 31, 2024 and consisted primarily of the costs of internal software development and other capital equipment.
Current wording
Net cash used in investing activities for the three months ended September 30, 2024 was $198,000, which consisted primarily of equipment purchases.
Previous wording
Net cash used in investing activities was $745,000 for the nine months ended March 31, 2023 and consisted primarily of the costs of internal software development and other capital equipment.
Current wording
Net cash used in investing activities for the three months ended September 30, 2023 was $181,000, which consisted primarily of equipment purchases.
Previous wording
Net cash provided by financing activities was $6,247,000 for the nine months ended March 31, 2023, which primarily consisted of $5,602,000 in net borrowing under the working capital line of credit, and $697,000 in net proceeds from sales of common stock under our ATM offering.
Current wording
Net cash provided by financing activities for the three months ended September 30, 2023 was $2,034,000, which primarily consisted of $2,074,000 in net borrowing under the working capital line of credit.
Previous wording
We have evaluated our expected cash requirements over the next twelve (12) months, which include, but are not limited to, investments in additional sales and marketing and research and development, capital expenditures, and working capital requirements and have determined that our existing cash resources are not sufficient to meet our anticipated needs during the next twelve (12) months, from the filing of this quarterly report, and that additional financing is required to support current operations.
Current wording
We have evaluated our expected cash and working capital requirements, which include, but are not limited to, investments in additional sales and marketing, research and development and capital equipment and have determined that our existing cash resources are not sufficient to meet our anticipated needs for the next twelve (12) months following the filing date of this quarterly report.
Previous wording
As of May 6, 2024, we had a cash balance of $1.7 million, funding available under our GBC Credit Facility under which up to $3.2 million is currently available, subject to borrowing base limitations, and funds available under our 2023 Subordinated LOC of up to $2.0 million. Our operations have relied on our ability to successfully maintain and draw on our credit facilities. In light of the recent Default under the GBC Credit Facility, we are working with GBC to modify the financial covenants in Agreement to prevent future defaults. However, there is no guarantee that we will be able to modify the terms in a manner that is favorable to us. If we are unable to modify the terms or otherwise meet the conditions provided in the Agreement, the funds may not be available to us.
Current wording
As of January 31, 2025, we had a cash balance of $0.4 million, available funding under our GBC Credit Facility for up to $4.9 million, subject to borrowing base limitations, and additional borrowing capacity under our 2023 Subordinated LOC of $1.0 million. Our operations have relied on our ability to successfully maintain and draw on our credit facilities. Our ability to draw funds from the GBC Credit Facility is subject to certain restrictions, covenants and borrowing base limitations. In light of the recent Default under the GBC Credit Facility, the financial covenants in the Agreement were modified to help prevent future defaults.
Previous wording
Our ability to draw funds from the GBC Credit Facility is subject to certain restrictions, covenants and borrowing base limitations. If we are unable to modify the terms or otherwise meet the conditions provided in the loan documents, the funds may not be available to us. In addition, the Company’s operations have been impacted by delays in new orders of its energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital spending in the market sector that we serve and interest rate variability affecting selected large customer fleets which have impacted its ability to meet projected revenue targets and generate cash from operations. Further, these events have placed pressure on the Company’s cash resources and raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months following the filing date of this Quarterly Report on Form 10-Q .
Current wording
In addition, our ability to meet projected revenue targets and generate cash from operations has been impacted by delays in new orders of our energy storage solutions, primarily due to deferrals of new forklift purchases caused by lower capital spending in the market sector that we serve and due to interest rate variability affecting capital spending in certain large customer fleets.
Previous wording
Furthermore, should there be any delays in the receipts of key component parts, due in part to supply change disruptions, our ability to fulfill the backlog of sales orders will be negatively impacted resulting in lower availability of cash resources from operations. In that event, we may be required to raise additional funds by issuing equity or convertible debt securities. If such funds are not available when required, management will be required to curtail investments in new product development, which may have a material adverse effect on future cash flows and results of operations and the Company’s ability to continue operating as a going concern.
Current wording
Furthermore, should there be any delays in the receipts of key component parts, due in part to supply change disruptions, our ability to fulfill the backlog of sales orders will be negatively impacted resulting in lower availability of cash resources from operations. In that event, we may be required to raise additional funds by issuing equity, convertible debt securities or other forms of indebtedness. If such funds are not available when required, management will be required to curtail investments in new product development, which may have a material adverse effect on future cash flows and results of operations and our ability to continue operating as a going concern.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
These events and circumstances raise substantial doubt about our ability to continue as a going concern for the next twelve (12) months following the filing date of this quarterly report. SeeLiquidity and Financial Condition in Note 2 – Summary of Significant Accounting Policies to theunaudited condensed consolidated financial statements for additional information.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table represents our unaudited condensed consolidated statement of operations for the nine months ended March 31, 2024 and March 31, 2023.
Previous report — wording carried elsewhere
Net loss for the nine months ended March 31, 2024 increased by $301,000 or 6%, to $5,566,000 as compared to $5,265,000 for the nine months ended March 31, 2023. The increase in net loss for the nine months ended March 31, 2024 was primarily attributable to increased gross profit, offset by increases in operating expenses and interest expense.